UWM, UMortgage tied in new ‘shell company’ allegations

Plus: DOJ arrests two loan officers and charges them with mortgage fraud

April 26, 2024

Good morning! This is Mortgage Nuggets, your daily dive into the pool of mortgage news. Here’s what we’ve got for you today…

Disclaimer: Average mortgage rates as of Apr 25, 2024. © MND's Daily Rate Index.

1. UWM, UMortgage tied in new ‘shell company’ allegations

Just weeks after allegations against United Wholesale Mortgage (UWM) were published in an exposé-style report and a class action lawsuit, Hunterbrook Media is once again putting the Michigan lender under the spotlight.

Yesterday, the hedge-funded media company published its latest report alleging that a UWM executive set up a shell company that in 2019 was used to purchase and establish UMortgage.

Hunterbrook claims that UMortgage, which operates in 48 states and the District of Columbia, acted as a “reliable funnel of loans to UWM", “set prices to make UWM look cheaper than competitors“ and "sent UWM an estimated 77% of its loans" in the past three years.

2. DOJ arrests two loan officers and charges them with mortgage fraud

Two former New Jersey-based mortgage loan originators, Christopher Gallo and Mehmet Elmas, have been charged with conspiracy to commit bank fraud by the U.S. Attorney's Office.

Both were associated with NJ Lenders Corp and are accused of using their positions to falsify loan documents to fraudulently obtain lower mortgage rates on properties misrepresented as primary residences when they were actually rental or investment properties.

Gallo, a top-ranked loan originator, and Elmas, his assistant, were both released on a $200,000 bond. The charge against Gallo and Elmas could lead to 30 years in prison and significant fines, reflecting the severity of the allegations.

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— Dave Krichmar CEO

3. Catch up quick

💸 Mr. Cooper delivers $181M profit in Q1 2024. (YahooFinance)

⬇️ Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks lost an average of $1,056 on each loan they originated in 2023. (MBA)

📊 U.S. growth slowed in the first quarter, but inflation remained a bug. (NYT)

4. Pending home sales surge 3.4% in March

Pending home sales in the U.S. surged by much more than expected in the month of March, according to a report released by the NAR yesterday.

NAR said its pending home sales index spiked by 3.4 percent to 78.2 in March after jumping by 1.6 percent to 75.6 in February. Economists had expected pending home sales to rise by just 0.3 percent.
A pending home sale is one in which a contract was signed but not yet closed.

Reflecting on these numbers, NAR Chief Economist Lawrence Yun commented, "March's Pending Home Sales Index - at 78.2 - marks the best performance in a year, but it still remains in a fairly narrow range over the last 12 months without a measurable breakout. Meaningful gains will only occur with declining mortgage rates and rising inventory."

5. Homebuying optimism is up among veterans

The number of veterans and service members who plan to purchase a home in the next six months was up by 15 percentage points year-over-year, according to the Veterans Homebuying Report released this week.

The quarterly national survey, conducted over the first half of March, found 42% of respondents planned to purchase a home by the end of September 2024.

"Veterans and service members are increasingly optimistic about their own finances and where the national economy is heading, which continues to translate into more Veterans moving up their homebuying timelines," said Chris Birk, vice president of mortgage insight at Veterans United.

You’re all caught up. See you on Monday!

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